Construction Industry Forecast Buoyed by Outlook for LNG

Posted March 2, 2015

Construction Industry Forecast Buoyed by Outlook for LNG in 2015: Labour emerging as critical issue$206 billion in future projects proposed for B.C. expected to intensify province’s skills shortageThis is a reproduction and summary of a VRCA News Feature published in the BIV Newspaper. Read the original VRCA & BIV Newspaper article

FortisBC has started construction of its expanded Tilbury LNG facility. From left to right: Michael Mulcahy, president and CEO, FortisBC ; Barry V. Perry, president, Fortis Inc.; B.C. Premier Christy Clark; and John Walker, executive vice-president, western Canadian operations, Fortis Inc.

The construction industry is looking at 2015 as a springboard year in which decisions about multibillion-dollar projects will occur that could fuel the economy for the next decade. But the real issue looming is whether B.C. will have the skilled workers in place in time to complete the projects.

Statistics to fall 2014, compiled by BC Construction Association (BCCA), tallied $84 billion in projects underway and another $206 billion proposed in 2015 and beyond. The BCCA estimates there will be 49,800 openings for skilled trades and 26,000 unfilled labour jobs by 2023.

Optimism is riding high that a final investment decision (FID) will be made by one of the LNG proponents in 2015 at one of the northern coastal ports vying for the development.

“We are optimistic that one or two will move ahead,” said Renata King, director of business development for Northern Development Initiative Trust, as three proposals (two LNG pipelines and one export facility) received environmental approval in late 2014 from the B.C. government.

FortisBC in the B.C. Lower Mainland is already out of the gate at its Tilbury LNG plant. Construction has started on the $400 million expansion, adding 1.1 million gigajoules of LNG to storage and 34,000 gigajoules of liquefying capacity.

In addition there is the Petronas export terminal with the Prince Rupert Gas Transmission pipeline (TransCanada Corp.), both Shell and Chevron LNG proposals in Kitimat, and in Port Edward, the Pacific NorthWest LNG joint venture, which is getting closer to an FID on its $11.4 billion proposed project at Lelu Island.

The degree of activity has King working hard to ensure that contractors, subcontractors and suppliers are ready for the economic boom that will come with the building of these multibillion-dollar projects.

“We want to make sure they are ready for these projects. These are multinational companies and they have requirements for pre-qualification [to bid on contracts]. We are showing local companies what they need to have in place to have an opportunity.” — Renata King, director of business development for Northern Development Initiative Trust

King is urging companies throughout B.C. to register on the website LNGBuyBC.ca. She is also encouraging companies in southern B.C. to form partnerships with northern companies, which can be smaller but have local knowledge, to expand their services and share expertise.

Labour emerging as critical issueBill Everett, COO of the Southern Interior Construction Association believes his region is looking at 2015 as an improved year over 2014. But labour and skills shortages remain a question on the horizon as the construction industry picks up.

“Going into 2015 is going to get more intense and, with the labour shortage, a perfect storm for the improving economy.” — Greg Baynton, president of the Vancouver Island Construction Association

Renata King adds that while the 18 LNG proposals are grabbing headlines – and a final investment decision is expected on one or two in 2015 – they are only part of the northern region’s development potential. “There is $50 billion to $100 billion in proposed projects in northern B.C.,” she said, adding those projects include new mines, transmission lines, major projects such as the Site C dam and new hospital construction.

“The big issue will be labour,” King said. “These projects will require hundreds if not thousands of people.”

In the Lower Mainland, construction is expected to continue strong into 2015, with a record $1 billion in building permits issued in October 2014 and attributed largely to government spending on medical facilities such as the Children’s and Women’s Health Centre in Vancouver.

Urban Development Institute (UDI) chairman David Porte said new housing starts (represented by mainly multiple-unit buildings) will continue into 2015 at the 2014 level of 19,000.

UDI members will be carefully watching the upcoming transit referendum in 2015 as it has the potential to open new development opportunities along Broadway and in Surrey.

Economist Roslyn Kunin, a fellow with the Canada West Foundation and former Canada Manpower analyst, said that labour looms as the greatest stumbling block as B.C.’s economy heads towards a continued economic growth of approximately 2% in 2015.

As B.C. goes deeper into 2015, the traditional construction industry will face competition from a newly revitalized sector, shipbuilding. Seaspan has won an $8 billion contract to build the non-combat portion of the federal government’s new shipbuilding program. Seaspan’s $170 million Vancouver Shipyards modernization project, started in late 2012, is now complete, and the shipyard is ramping up its workforce, doubling it to 300 in 2016 and tripling it in 2017.

“Once we start constructing the really big ships, starting in 2017, the number will be approximately 1,000 tradesmen and –women.”— Jonathan Whitworth, Seaspan CEO

At Cratex we’re anticipating a steady increase in the demand for customized containers as industry and construction picks up due to LNG projects going ahead, growth in housing starts throughout the lower mainland and government spending on facilities and transit and generally a booming construction industry.

As we proudly offer high quality workmanship done with attention to detail and integrity, our on-site modification shop will be challenged to grow to meet this demand and we will be seeking capable and qualified workers to add to our team. As a testament to the high quality work we do, we also do modifications for other container companies.